The Hon’ble High Court of Bombay vide order dated 19.06.2020 refused to stay the decision of the Reserve Bank of India to cancel license of CKP Cooperative Bank Limited, a city based bank.
The said order was passed pursuant to separate petitions filed by one Mr. Vishwas Utagi (Writ petition-ASDB-LD-VC-14 of 2020) and Mr. Arun T. Dhumale (Writ petition-ASDB-LD-VC-42 of 2020) challenging the Reserve Bank of India on cancelling the banking licence of CKP Cooperative Bank Limited.
The Petitioners who are convenors of ‘Save CKP Co-op Bank Kriti Samiti,’ comprising around 500 people including members, shareholders, account holders, depositors, and employees of CKP Bank, filed the present petitions due to the said bank not filing any statutory appeal even after having the remedy of a statutory appeal.
The Coram comprising of Justices Nitin M Jamdar and Surendra P Tavade via video conferencing, refused to grant interim relief to the Petitioners.
While passing the said order, the Hon’ble Coram stated that the cancellation of CKP Bank’s licence by the Reserve Bank of India was preceded by various notices and inspections. Also, the Reserve Bank of India possessed superintendence and various powers over all other banks across the nation in the interest of banking policy under the Banking Regulations Act, 1949.
It was further stated by the Hon’ble High Court that, pursuant to various enquiries held against the said bank, it was revealed that the affairs of the CKP Bank were conducted detrimental to the interest of the depositors and public and that the financial position of CKP Cooperative Bank Limited had deteriorated constantly.
Even after furnishing a show cause notice dated 11.06.2015 and pursuant to which CKP Bank submitting action plans in July and November, 2016, the said bank failed to improve its situation. This led to a further deterioration of the said bank’s financial position as per an inspection carried out by the Task Force on Co-operative Urban Banks on 31.03.2019.
Finally, holding that the scope of interference of writ courts in such decisions of the Reserve Bank of India was extremely narrow and that the RBI had the authority to take necessary actions in the interest of depositors, the Hon’ble High Court stated as follows, “The Reserve Bank of India is entrusted with powers to take necessary steps in the interest of depositors, banks and public. Prima facie, we do not find that there is any fundamental error in the approach of the Reserve Bank of India to issue any interim directions.”
Order:BOMBAY HC ORDER